Tuesday, June 10, 2008
8:30 AM U.S. International Trade in Goods and Services, September 2007 (Bureau of the Census)
Trade remains the one bright spot in the economy. Imports declined in much of the first half of the year. At most, there was a modest rise in April. Exports have been expanding by about 0.5 percent per month, because other economies are more robust and the dollar remains very weak. For these reason, the trade deficit has been falling by about $0.2-to-$0.3 billion per month. One caveat is that higher prices for crude oil could wipe out improvement elsewhere in the trade accounts.
8:30 AM Advance Retail Sales (Bureau of the Census)
Consumer confidence is quite low. This is keeping spending growth to a minimum. Retail sales in May, excluding cars and gasoline and groceries, probably showed only a modest rise (0.3-to-0.4 percent), even with the aid of tax rebate checks. Where the money is spent is telling. More was spent, probably, at discount outlets rather than department stores. In fact, department stores downsized the number of clerks at the cash registers. Obviously, they are not worried about long lines at those registers this summer. Meanwhile, vehicle sales were as weak in May as they have been all year. Sales of SUVs and pick-up trucks have tumbled faster than even pessimists would have guessed.
Friday, June 13, 2008
8:30 AM Consumer Price Indexes (Bureau of Labor Statistics)
This is the big number this week. Prices for food and energy are still picking up. But the big story is that the "core" CPI (which excludes food and energy) is still rising at the 0.2-to-0.3 percent per month trend rate. Expect this trend to continue through the summer, if not pick up, even with a very weak economic environment. Either it picks up or profit margins get squeezed even more. Either prospect makes it difficult for the weak overall economy to climb back on to the road to recovery.
Average hourly wages rose 0.3 percent even in a month when the unemployment rate jumped to 5.5 percent. But the "core" CPI rose by 0.1 percent in April and perhaps by 0.2 percent in May. That cannot continue. But the second worry is how to raise retail prices in a weak economic environment. This is one of the biggest factors in why the weak economic environment is likely to be a long drawn out affair.
The latest employment data make it clear that the domestic economy remains stuck in a rut. There were 49,000 fewer workers in May, meaning there were 49,000 fewer paychecks to pay for higher gasoline, home utility bills, etc. The domestic economy remains weaker than most other industrial countries. The U.S. Leading Economic Index is weaker as well, suggesting no quick change in these conditions.
The global economy is expanding at about twice the pace as the U.S. economy this year and that could be true of 2009 as well. If a U.S. recovery begins in 2009, domestic GDP growth might return to about 3 percent in 2010 while the global economy grows by 4 percent. That much growth (domestic or international) could open up new jobs across the board. It may seem like a long road ahead but a return to prosperity remains the destination.
